Karachi, November 07, 2017: JCR-VIS Credit Rating Company Ltd. has reaffirmed entity ratings of Ali Gohar & Company (Private) Limited (AG&C) at ‘A/A-2’ (Single A/A-Two). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on March 7, 2016.

Ratings assigned to AG&C derive strength from a sound distribution infrastructure yielding a low business risk and strong financial profile to the company. Current ratings also take into account AG&C’s status as one of the leading national distributor in the country. With its structure and available resources, the company has sufficient capacity to serve a wide outreach; strength of distribution network is among the rating drivers.

Topline of the company depicted a decline on account of one of its key principals’ exit, during the outgoing year. However, management is making efforts in filling the gap by growing organically as well as adding new principals to its current portfolio. The latter is considered essential in order to reduce concentration in sales, which is currently on the higher side. Materialization of these plans is yet to be seen. Furthermore, reduced sales coupled with higher administrative expenses translated into a lower bottom line.

Capitalization levels of the company have strengthened overtime on account of profit retention and minimal dividend payments. Moreover, liquidity profile of the company is considered sound in view of improving cash flows and sizeable liquidity carried on balance sheet. AG&C’s working capital cycle is favorable given the extended payment period from its principals; the same has slightly deteriorated during FY17. As a result, utilization of short-term borrowings witnessed an increase during the year to fund working capital requirements. Given the increase in equity base and limited debt levels, leverage indicators have remained on the lower side. Going forward, management will need to ensure that leverage indicators remain at similar levels in order to commensurate with its current ratings.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 207) at 35311861-70 (10 lines) or fax to 35311873.

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